Robinhood layoffs

Mass layoffs and sale of cryptocurrencies in Robinhood

  • Robinhood Markets lays off 7% of its workforce due to declining client engagement.
  • Robinhood’s monthly active user base has been cut in half, along with a 5% decline in transaction fee revenue.
  • Robinhood is forced to sell cryptocurrencies and liquidate holdings due to government regulations and classifications.

Cryptocurrency and stock exchange Robinhood Markets recently announced that it will be massive layoffs its workforce.

Specifically, it is expected to cut approximately 7% or 150 full-time jobs. This measure is implemented in response to declining customer engagement, a challenge the company has been grappling with.

Commitment to operational excellence and team adjustments

The company has stated its goal of ensuring operational excellence in the way its teams work on an ongoing basis.

In some cases, this may mean making changes based on volume and workload. With this statement, Robinhood seeks to recalibrate its internal structure to improve its performance and efficiency.

This is not the first time Robinhood has cut staff. As of August 2022, the company had already reduced its workforce by 23%, and a total of 1,000 employees were laid off last year.

Despite experiencing a surge in popularity during the pandemic and lockdowns, when a large number of young users flocked to trade crypto memes, the monthly active user base has dropped significantly.

While in the first quarter of 2021 they had more than 21 million monthly active users, by May 2023 that number had dropped to approximately 11 million.

Financial impact and regulatory reasons

In addition to the decline in users, transaction fee revenue has also seen a 5% drop in Q1 2023 compared to a year earlier, barely reaching half of the revenue earned in Q1 2021. .

These factors, combined with regulatory pressure on the industry, have led Robinhood to diversify and make strategic decisions, such as the sale of certain cryptocurrencies.

For example, in an effort to diversify its earnings, the company announced the purchase of credit card startup X1 in an all-cash deal worth $95 million.

Robinhood to Sell Cryptocurrencies and Decrease Holdings

Regulatory pressure in the United States has also played a role in these cuts, as specific restrictions and classifications have been placed on certain cryptocurrencies, leading Robinhood to sell Cardano (ADA), Polygon (MATIC) and Solana (SOL) due to to their classification as securities under the SEC. Which will be sold today June 27, as reported by Robinhood.

As a result, many Robinhood users have withdrawn or sold about half of their holdings in the last two weeks. It is estimated that the sale of these cryptocurrencies will generate around $15 million in MATIC, $25 million in ADA and $30 million in SOL.

Liquidation of holdings and options for Robinhood

Jump Trading, Robinhood’s cryptocurrency management company, will conduct liquidation of all remaining holdings after 6:59 p.m. ET on June 27.

According to experts, there are several options for conducting this liquidation, including selling over-the-counter (OTC), keeping them on Robinhood’s books, protecting against potential criminals, and depositing them on centralized exchanges.

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